SINGAPORE (Reuters) - The dollar was headed for its best week since early April on Friday as tumbling oil prices weighed on commodity currencies and division over Europe’s emergency fund dragged on the euro.
FILE PHOTO: U.S. dollar banknote is seen in this picture illustration taken May 3, 2018. REUTERS/Dado Ruvic/Illustration/File Photo
The dollar stands near a two-and-a-half week high against a basket of currencies and is 0.9% stronger for the week. It is up nearly 3% against the oil-sensitive Norwegian krone and about 1% on the euro \.
Moves in the Asian session were modest and led by a drift lower in the Australian and New Zealand dollars as inconclusive results from a Gilead antiviral drug trial on patients with COVID-19 unnerved traders who have been looking to headlines for direction.
“I’m running with a more bearish story for the next two or three weeks,” said Westpac FX analyst Imre Speizer.
“The economic data is going to be horrible. I’m betting that markets will be shocked by it, even though we know it’s coming, and that will cause risk sentiment to fall,” he said, which means selling pressure on the New Zealand dollar.
The Aussie and kiwi each shed about 0.2%, holding the kiwi below 60 cents at $0.5996 and the Aussie at $0.6359, beneath resistance around 64 cents per dollar.
Both had rallied through those levels overnight as markets shrugged off dire economic news in Europe and the United States and commodity prices forged ahead.
The euro fell to a one-month low of $1.0756 on Thursday, and struggled to lift much above it on Friday after the European Union agreed to build a trillion euro emergency fund, but left the details for later.
With Italy and Spain hit far harder than Germany by the crisis, old enmities have surfaced across a bloc which faces a cut to output as deep as 15% according to the European Central Bank.
“We have no idea how it will be funded and this is not the panacea to stop an impending 15% contraction in GDP,” said Chris Weston, head of research at Melbourne brokerage Pepperstone.
The euro last sat at $1.0772. The British pound was steady at $1.2352, which is down about 1.1% for the week, and the Japanese yen softened slightly to 107.64 per dollar.
Preliminary goods-orders data in the United States and a German business sentiment survey due later on Friday are unlikely to improve investors’ mood, with any global recovery expected to be slow and patchy.
“It depends on what you mean by recovery,” said HSBC economist Frederic Neumann, who is forecasting an 8.4% annualised expansion in Asia, excluding Japan, in the second half of 2020.
“The return of growth is comforting, especially for financial markets looking for a light at the end of the tunnel,” he said. “But the cumulative shortfall in demand will also mean lingering financial pressures for some borrowers and fewer available jobs.”
Reporting by Tom Westbrook; Editing by Richard Pullin and Kim Coghill